Bengaluru man joins chit fund, pays Rs 12,500 for 40 months, wins Rs 5 lakh but receives only Rs 20,000; consumer court orders company to pay Rs 4.08 lakh

A Bengaluru man who paid Rs 12,500 every month for 40 months into a Rs 5 lakh chit fund scheme received only Rs 20,000 after winning his bid, prompting him to approach a consumer commission. The commission has now directed Samith Chits Pvt Ltd to pay him the remaining Rs 4,07,940 with 6.5% annual interest.

President Syed Anser Khaleem and two members, Bangalore 1st Additional District Consumer Disputes Redressal Commission also ordered the company to pay Rs 3,000 towards proceedings costs after finding deficiency in service and an unfair trade practice. The order was pronounced on September 28, 2026, in a complaint filed by Vishnuprasad against the chit fund company.

Man completes Rs 5 lakh chit scheme

According to the complaint, the subscriber, Vishnuprasad, joined a Rs 5 lakh chit scheme operated by Samith Chits. The scheme required him to pay Rs 12,500 every month over 40 months.

The chit period ended in June 2025. Vishnuprasad had successfully bid for the chit in May 2025, making him eligible to receive the prize amount under the agreement.

However, the company did not pay the full amount due to him. It subsequently issued two cheques towards payment: one for Rs 1 lakh, dated July 5, 2025, and another for Rs 3,27,940, dated July 15, 2025.

Both cheques were drawn on a private bank's Rajajinagar branch in Bengaluru.

Both cheques returned for insufficient funds

Vishnuprasad presented the Rs 1 lakh cheque through his own bank account at the Ramamurthy Nagar branch on July 17, 2025. The bank returned it unpaid with the endorsement "Funds Insufficient".

He presented the second cheque, worth Rs 3,27,940, on July 24, 2025. That cheque was also dishonoured for insufficient funds.

The commission's order records that Samith Chits eventually paid Vishnuprasad Rs 20,000 after he followed up over the unpaid amount. However, the company did not clear the remaining dues of Rs 4,07,940.

Vishnuprasad then issued a legal notice under Section 138 of the Negotiable Instruments Act, which deals with cheque dishonour. He also initiated proceedings before the Additional Chief Judicial Magistrate court in Bengaluru in two cases, numbered CC No. 72718/2025 and CC No. 72660/2025.

He subsequently approached the consumer commission seeking relief for the unpaid chit prize money.

Company did not contest complaint

The commission examined the complaint, Vishnuprasad's affidavit and documentary evidence marked as Annexures P-1 to P-13.

The documents included the company's brochure, a statement issued by Samith Chits, copies of both cheques, records showing their dishonour and proof of the Rs 20,000 payment.

The commission observed that the cheques issued towards the chit prize money had been returned unpaid and that the company had not cleared the outstanding amount despite follow-ups.

Samith Chits did not appear before the commission despite being issued notice. It was placed ex parte on July 24, 2026, leaving Vishnuprasad's allegations and supporting evidence undisputed in the consumer proceedings.

Based on the material on record, the commission concluded that the company had failed to pay the amount due after the subscriber successfully bid for the chit. It held that the conduct amounted to deficiency in service as well as an unfair trade practice.

Cheque-bounce cases do not prevent consumer complaint

The commission also addressed the separate proceedings initiated under Section 138 of the Negotiable Instruments Act.

It observed that proceedings for cheque dishonour and a consumer complaint serve different purposes. The existence of the former did not prevent Vishnuprasad from pursuing a remedy under consumer protection law.

The commission relied on Section 100 of the Consumer Protection Act, 2019, which provides that remedies under the Act are in addition to, and not in derogation of, remedies available under other laws.

It also referred to the Supreme Court's decision in Shriram Chits (India) Private Limited v. Raghachand Associates (2024). The commission cited the ruling to support its position that a chit subscriber can qualify as a consumer and a chit fund operator as a service provider under consumer protection law.

On this basis, it held that Vishnuprasad was entitled to seek relief before the consumer commission despite the separate cheque-dishonour proceedings.

Company directed to pay Rs 4.08 lakh with interest

The commission allowed the complaint and directed Samith Chits, through its managing director, to pay Vishnuprasad Rs 4,07,940 with interest at 6.5% per annum, calculated from the date of filing the consumer complaint until realisation.

The company must also pay Rs 3,000 towards the cost of the proceedings.

The order directs Samith Chits to comply within 30 months from the date of receipt of the order and submit a compliance report to the commission within 45 days from the date of receipt.

The ruling provides relief to the subscriber for the unpaid chit amount while separately addressing the costs incurred in pursuing the consumer complaint.